Market Update October 2020

Friends and clients-

The real estate market is making up for lost time, but things might change soon.

1 – A surge in sales and record prices

This spring, home sales slowed to a crawl due to the coronavirus pandemic. However, this summer, the market has come roaring back. Sales of existing homes surged 24.7% in July compared to June (the last months for which we have full data). That’s the biggest gain in sales since the National Association of Realtors started tracking these numbers in 1968.

Home prices are also rising. The median home price reached a record high this July, both in absolute terms and also when adjusted for inflation. When adjusted for inflation, current median home prices are 3.4% higher than the previous record set during the housing bubble in 2006. 

2 – Never-before seen mortgage rates

One thing that’s contributing to both sales and price growth are record-low mortgage rates. The average 30-year mortgage rate dropped to 2.88% a few weeks ago. That’s a number that would have been unimaginable just a year ago, but these days, rates as low as1.99% have been spotted in the wild. This is making homes more affordable to buyers, and it’s increasing demand even more than the lockdown may have. However, things might be changing.

3 – Clouds on the horizon

This August, nearly a third of renters were unable to pay rent. Likewise, a growing number of homeowners are falling behind on mortgage payments. These are lingering effects of the economic lockdown surfacing now because unemployment benefits and various mortgage forbearance programs are coming to an end. That’s why experts predict a rise in defaults and evictions, which is likely to wash over the entire market in the coming weeks and months.